Reviewer 11u5b

Carolyn M. Garcia -vs- Rica Marie S. Thio GR No. 154878, 16 March 2007 FACTS: Respondent Thio received from petitioner Garcia two crossed checks which amount to US$100,000 and US$500,000, respectively, payable to the order of Marilou Santiago. According to petitioner, respondent failed to pay the principal amounts of the loans when they fell due and so she filed a complaint for sum of money and damages with the RTC. Respondent denied that she contracted the two loans and countered that it was Marilou Satiago to whom petitioner lent the money. She claimed she was merely asked y petitioner to give the checks to Santiago. She issued the checks for P76,000 and P20,000 not as payment of interest but to accommodate petitioner’s request that respondent use her own checks instead of Santiago’s. RTC ruled in favor of petitioner. CA reversed RTC and ruled that there was no contract of loan between the parties. ISSUE: 1. Whether or not there was a contract of loan between petitioner and respondent. 2. Who borrowed money from petitioner, the respondent or Marilou Santiago? HELD 1. The Court held in the affirmative. A loan is a real contract, not consensual, and as such I perfected only upon the delivery of the object of the contract. Upon delivery of the contract of loan (in this case the money received by the debtor when the checks were encashed) the debtor acquires ownership of such money or loan proceeds and is bound to pay the creditor an equal amount. It is undisputed that the checks were delivered to respondent. 2. However, the checks were crossed and payable not to the order of the respondent but to the order of a certain Marilou Santiago. Delivery is the act by which the res or substance is thereof placed within the actual or constructive possession or control of another. Although respondent did not physically receive the proceeds of the checks, these instruments were placed in her control and possession under an arrangement whereby she actually re-lent the amount to Santiago. Petition granted; judgment and resolution reversed and set aside. BF United Homeowner’s Association, Inc. The City Mayor 515 Scra 1 (2007) Facts: BF Homes Parañaque Subdivision (BFH) spans Parañaque, Las Piñas, & Muntinlupa. The Municipal Council of Parañaque enacted an Ordinance prescribing the land use plan & zoning pursuant to the LGC. Secs 11.5 & 11.6 of the Ordinance, reclassified El Grande and Aguirre Avenues from residential to commercial areas. Petitioners filed with the CA a petition for prohibition questioning the constitutionality of Secs 11.5, 11.6, etc: the reclassification of certain portions is unconstitutional bec it amounts to impairment of the contracts between the developer and the lot buyers. The annotation on the lot buyers’ titles provides that "the property shall be used for residential purposes only and for no other purpose." Respondents alleged that the age of the Ordinance is a valid exercise of police power by the Municipal Council, and the ordinance can nullify or supersede the contractual obligations entered into by the petitioners and the developer. Petitioners invoke PD 9571 which is intended to protect the buyers and to ensure that subdivision developers keep their promises. The developer promised that the property shall be used for residential purposes only. The reclassification is unconstitutional because it impairs the contracts between the developer and the lot buyers.

ISSUES: Is the Ordinance constitutional considering that it impairs a contractual obligation annotated in homeowners’ titles and violates the doctrine of separation of powers; HELD: SC: We have upheld in several cases the superiority of police power over the non-impairment clause. The constitutional guaranty of non-impairment of contracts is limited by the exercise of the police power of the State, in the interest of public health, safety, morals and general welfare. Ortigas & Co v. Feati Bank: contractual restrictions on the use of property could not prevail over the reasonable exercise of police power through zoning regulations… while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power… Invariably described as "the most essential, insistent, and illimitable of powers" and "in a sense, the greatest and most powerful attribute of government," the exercise of the power may be judicially inquired into and corrected only if it is

capricious, whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. Our jurisdiction guarantees sanctity of contract and is said to be the "law between the contracting parties," but while it is so, it cannot contravene "law, morals, good customs, public order, or public policy." Above all, it cannot be raised as a deterrent to police power, designed precisely to promote health, safety, peace, and enhance the common good, at the expense of contractual rights, whenever necessary. TIU vs. PLATINUM PLANS PHILIPPINES G.R. No. 163512, February 28, 2007 FACTS: Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry. From 1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing Director. On January 1, 1993, respondent rehired petitioner as Senior Assistant Vice-President and Territorial Operations Head in charge of its Hong Kong and Asean operations. The parties executed a contract of employment valid for five years. On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the Vice-President for Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry. Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch 261. Respondent alleged, among others, that petitioner’s employment with Professional Pension Plans, Inc. violated the non-involvement clause in her contract of employment. In upholding the validity of the non-involvement clause, the trial court ruled that a contract in restraint of trade is valid provided that there is a limitation upon either time or place. In the case of the preneed industry, the trial court found the two-year restriction to be valid and reasonable. On appeal, the Court of Appeals affirmed the trial court’s ruling. It reasoned that petitioner entered into the contract on her own will and volition. Thus, she bound herself to fulfill not only what was expressly stipulated in the contract, but also all its consequences that were not against good faith, usage, and law. The appellate court also ruled that the stipulation prohibiting nonemployment for two years was valid and enforceable considering the nature of respondent’s business. ISSUE: Whether the Court of Appeals erred in sustaining the validity of the non-involvement clause HELD: In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondent’s. More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, The Court finds the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to respondent. Hence the restraint is valid and such stipulation prevails.

Duncan Assoc. of Detailman-PTGWO vs. Glaxo Wellcome Phils., Inc. G.R. No. 162994, September 17, 2004 FACTS: Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract of employment signed by Tecson stipulates, among others, that he agrees to study and abide by the existing company rules; to disclose to management any existing future relationship by consanguinity or affinity with co-employees or employees with competing drug companies and should management find that such relationship poses a prossible conflict of interest, to resign from the company. Company's Code of Employee Conduct provides the same with stipulation that management may transfer the employee to another department in a non-counterchecking position or preparation for employment outside of the company after 6 months. Tecson was initially assigned to market Glaxo's products in the Camarines Sur-Camarines Norte area and entered into a romantic relationship with Betsy, an employee of Astra, Glaxo's competition. Before getting married, Tecson's District Manager reminded him several times of the conflict of interest but marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors informed him of conflict of intrest. Tecson asked for time to comply with the condition (that either he or Betsy resign from their respective positions). Unable to comply with condition, Glaxo transferred Tecson to the Butuan-Surigao City-Agusan del Sur sales area. After his request against transfer was denied, Tecson brought the matter to Glaxo's Grievance Committee and while pending, he continued to act as medical representative in the Camarines Sur-Camarines Norte sales area. On Nov. 15, 2000, the National Conciliation and Mediation Board ruled that Glaxo's policy was valid... ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company is valid

RULING: Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is demotion in rank, or diminution in pay; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. None of these conditions are present in the instant case.

Star Paper Corporation vs. Simbol 487 SCRA 228 FACTS: Petitioner was the employer of the respondents. Under the policy of Star Paper the employees are: 1. New applicants will not be allowed to be hired if in case he/she has a relative, up to the 3rd degree of relationship, already employed by the company. 2. In case of two of our employees (singles, one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above. Respondents Comia and Simbol both got married to their fellow employees. Estrella on the other hand had a relationship with a co-employee resulting to her pregnancy on the belief that such was separated. The respondents allege that they were forced to resign as a result of the implementation of the said assailed company policy. The Labor Arbiter and the NLRC ruled in favor of petitioner. The decision was appealed to the Court of Appeals which reversed the decision. ISSUE: Whether the prohibition to marry in the contract of employment is valid HELD: It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married Howard Comia, then a helper in the cuttermachine. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure. Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry persons other than co-employees. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the legislature’s silence that married persons are not protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid exercise of management prerogative. Corollary, the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic. In the case of Estrella, the petitioner failed to adduce proof to justify her dismissal. Hence, the Court ruled that it was illegal. Petition was denied. PREMIERE DEVELOPMENT BANK, vs. CA et al G.R. No. 128122; March 18, 2005

FACTS: 2 different persons with exactly the same name, i.e., Vicente T. Garaygay, each claimed exclusive ownership of Lot 23 by virtue of an owner’s duplicate certificate each had possession of during the period material covering said lot. One held TCT No. 9780, supra, and the other, TCT No. 9780 (693), supra. The technical description of the land

appearing in one copy corresponds exactly with that in the other. The date “June 14, 1944” appears on the face of both copies as a common date of entry. One, however, contained certain features, markings, and/or entries not found in the other and vice versa. On April 17, 1979, Garaygay of Cebu executed a deed of sale concerning subject lot in favor of his nephew Joselito. The sale notwithstanding, the owner’s duplicate certificate remained for some time in the seller’s possession. In another transaction, Garaygay of Rizal sold to Yambao and Rodriguez the same property. Buyers Yambao and Rodriquez would later sell a portion of their undivided interests on the land to Morales. Meanwhile, or on May 26, 1989, the deed of sale executed by Garaygay of Cebu in favor of his nephew Joselito was ed, paving the issuance in the latter’s name. Thereafter, thru the efforts of same Engr. Cortez, Lot 23 was subdivided into three (3) lots. Joselito posthaste sold the first lot to Toundjis who, pursuant to a Contract to Sell undertook to pay Joselito the P.5 Million balance of the P2.5 Million purchase price once she is placed in possession of a fenced-off property. And, for shares of stock, Joselito assigned the other two (2) lots to Century Realty which, after securing TCTs therefor, mortgaged the same to Premiere Bank to secure a loan. Issue: WON Toundjis and Premiere bank are buyers in good faith Held: As the Court sees it, the Deed of Sale was a simulated transaction because both JOSELITO and his uncle it this was a ‘t venture to sell the property in question. However, the facts suggest that the ‘t venture’ was not limited to the two of them. The persons who prepared and filed the application for reconstitution, and those officers in the LRA who followed it up and who thereafter subdivided the land into three lots for easier sale, those at the NBI who tried to persuade Yambao and Morales to settle the dispute . . . are apparently part of the ‘t venture’ or stand to profit from it”

VICTORIANO VS ELIZALDE ROPE WORKERS' UNION GR NO L – 25246, SEPTEMBER 12, 1974 FACTS: Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the "Iglesia ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958. As such employee, he was a member of the Elizalde Rope Workers' Union (hereinafter referred to as Union) which had with the Company a collective bargaining agreement containing a closed shop provision which reads as follows: hip in the Union shall be required as a condition of employment for all permanent employees workers covered by this Agreement.The collective bargaining agreement expired on March 3, 1964 but was renewed the following day, March 4, 1964. Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350, the employer was not precluded "from making an agreement with a labor organization to require as a condition of employment hip therein, if such labor organization is the representative of the employees." On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an amendment to — paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover of any religious sects which prohibit affiliation of their in any such labor organization". Being a member of a religious sect that prohibits the affiliation of its with any labor organization, Appellee presented his resignation to appellant Union in 1962, and when no action was taken thereon, he reiterated his resignation on September 3, 1974. Thereupon, the Union wrote a formal letter to the Company asking the latter to separate Appellee from the service in view of the fact that he was reg from the Union as a member. The management of the Company in turn notified Appellee and his counsel that unless the Appellee could achieve a satisfactory arrangement with the Union, the Company would be constrained to dismiss him from the service. This prompted Appellee to file an action for injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila to en the Company and the Union from dismissing Appellee. 1 In its answer, the Union invoked the "union security clause" of the collective bargaining agreement; assailed the constitutionality of Republic Act No. 3350; and contended that the Court had no jurisdiction over the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d) and (e). ISSUE/S: WON RA 3350 introducing an amendment to paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover of any religious sects which prohibit affiliation of their in any such labor organization" is unconstitutional RULING: NO. R.A. No. 3350 is constitutional on all counts. It must be pointed out that the free exercise of religious profession or belief is superior to contract rights. In case of conflict, the latter must, therefore, yield to the former.

Polotan vs CA 296 SCRA 247 (1998)

Facts: Private respondent Security Diners International Corporation (Diners Club), a credit card company, extends credit accommodations to its cardholders for the purchase of goods and other services from member establishments. Said goods and services are reimbursed later on by cardholders upon proper billing. Petitioner Rodelo G. Polotan, Sr. applied for hip and credit accommodations with Diners Club in October 1985. The application form contained and conditions governing the use and availment of the Diners Club card, among which is for the cardholder to pay all charges made through the use of said card within the period indicated in the statement of and any remaining unpaid balance to earn 3% interest per annum plus prime rate of Security Bank & Trust Company. Notably, in the application form submitted by petitioner, Ofricano Canlas obligated himself to pay tly and severally with petitioner the latter's obligation to private respondent. Upon acceptance of his application, petitioner was issued Diners Club card No. 3651-212766-3005. As of May 8, 1987, petitioner incurred credit charges plus appropriate interest and service charges in the aggregate amount of P33,819.84 which had become due and demandable. Demands for payment made against petitioner proved futile. Hence, private respondent filed a Complaint for Collection of Sum of Money against petitioner before the lower court.

Issue: WON the issues presented by the complainant is one of fact

Held: A contract of adhesion is one in which one of the contracting parties imposes a ready-made form of contract which the other party may accept or reject, but cannot modify. One party prepares the stipulation in the contract, while the other party merely affixes his signature or his "adhesion" thereto, giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing. In this case, petitioner, in effect, claims that the subject contract is one-sided in that the contract allows for the escalation of interests, but does not provide for a downward adjustment of the same in violation of Central Bank Circular 905. The claim is without basis. First, by g the contract, petitioner and private respondent agreed upon the rate as stipulated in the subject contract. Such is now allowed by C.B. Circular 905. 8 Second, petitioner failed to cite any particular provision of said Circular which was allegedly violated by the subject contract. Be that as it may, there is nothing inherently wrong with escalation clauses. Escalation clauses are valid stipulations in commercial contracts to maintain fiscal stability and to retain the value of money in long term contracts.

New sampaguita builders vs PNB 517 SCRA 430

Facts: Sampaguita secured a loan from PNB in an aggregate amount of 8M pesos, mortgaging the properties of Sampaguita’s president and chairman of the board. Sampaguita also executed several promissory notes due on different dates (payment dates). The first promissory note had 19.5% interest rate. The 2nd and 3rd had 21.5%. a uniform clause therein permitted PNB to increase the rate “within the limits allowed by law at any time depending on whatever policy it may adopt in the future x x x,” without even giving prior notice to petitioners. There was also a clause in the promissory note that stated that if the same is not paid 2 years after release then it shall be converted to a medium term loan – and the interest rate for such loan would apply. Later on, Sampaguita defaulted on its payments and failed to comply with obligations on promissory notes. Sampaguita thus requested for a 90 day extension to pay the loan. Again they defaulted, so they asked for loan restructuring. It partly paid the loan and promised to pay the balance later on. AGAIN they failed to pay so PNB extrajudicially foreclosed the mortgaged properties. It was sold for 10M. PNB claimed that Sampaguita owed it 12M so they filed a case in court asking sampaguita to pay for deficiency.

Issues: Whether PNB could unilaterally increase interest rates:

Held: No, The “unilateral determination and imposition” of increased rates is “violative of the principle of mutuality of contracts ordained in Article 1308 of the Civil Code.” One-sided impositions do not have the force of law between the parties, because such impositions are not based on the parties’ essential equality.

Although escalation clauses are valid in maintaining fiscal stability and retaining the value of money on long-term contracts, giving respondent an unbridled right to adjust the interest independently and upwardly would completely take away from petitioners the “right to assent to an important modification in their agreement” and would also negate the element of mutuality in their contracts. The clause cited earlier made the fulfillment of the contracts “dependent exclusively upon the uncontrolled will” of respondent and was therefore void. Besides, the pro forma promissory notes have the character of a contract d’adhésion, “where the parties do not bargain on equal footing, the weaker party’s [the debtor’s] participation being reduced to the alternative ‘to take it or leave it.’” Titan Construction Corp. vs Uni-Field Enterprises, Inc. G.R. No. 153874; March 1, 2007 Facts: Petitioner Titan Construction Corporation (petitioner) is engaged in the construction business, while respondent Uni-Field Enterprises, Inc. (respondent) is engaged in the business of selling various construction materials. From 1990 to 1993, petitioner purchased on credit various construction supplies and materials from respondent. Petitioner’s purchases amounted to P7,620,433.12 but petitioner was only able to pay P6,215,795.70, leaving a balance of P1,404,637.42. On 19 October 1994, respondent sent a demand letter to petitioner. But the balance remained unpaid. On 26 June 1995, respondent filed with the trial court a complaint for collection of sum of money with damages against petitioner. Issues: W/N the CA erred in finding legal basis for [awarding] liquidated damages, attorney’s fees and Interest in favor of respondent?

Held: Petitioner insists that the trial court and the Court of Appeals had no legal basis to award interest, liquidated damages, and attorney’s fees because the delivery receipts and sales invoices, which served as the basis for the award, were not formally offered as evidence by respondent. Petitioner also alleges that the delivery receipts and sales invoices were in the nature of contracts of adhesion and petitioner had no option but to accept the conditions imposed by respondent. On the allegation that the delivery receipts and sales invoices are in the nature of contracts of adhesion, the Court has repeatedly held that contracts of adhesion are as binding as ordinary contracts. Those who adhere to the contract are in reality free to reject it entirely and if they adhere, they give their consent. It is true that on some occasions the Court struck down such contract as void when the weaker party is imposed upon in dealing with the dominant party and is reduced to the alternative of accepting the contract or leaving it, completely deprived of the opportunity to bargain on equal footing. Considering that petitioner and respondent have been doing business from 1990 to 1993 and that petitioner is not a small time construction company, petitioner is "presumed to have full knowledge and to have acted with due care or, at the very least, to have been aware of the and conditions of the contract.” The Court, therefore, upholds the validity of the contract between petitioner and respondent. However, the Court will reduce the amount of attorney’s fees awarded by the trial court and the Court of Appeals. In this case, aside from the award of P324,147.94 as liquidated damages, the trial court and the Court of Appeals also ordered petitioner to pay respondent attorney’s fees "equivalent to 25% of whatever amount is due and payable."

Articles 1229 and 2227 of the Civil Code empower the courts to reduce the penalty if it is iniquitous or unconscionable. The determination of whether the penalty is iniquitous or unconscionable is addressed to the sound discretion of the court and depends on several factors such as the type, extent, and purpose of the penalty, the nature of the obligation, the mode of breach and its consequences.

The Court notes that respondent had more than adequately protected itself from a possible breach of contract because of the stipulations on the payment of interest, liquidated damages, and attorney’s fees. The Court finds the award of attorney’s fees "equivalent to 25% of whatever amount is due and payable" to be exorbitant because it includes (1) the principal of P1,404,114.00; (2) the interest charges of P504,114.00 plus accrued interest charges at 24% per annum compounded yearly reckoned from July 1995 up to the time of full payment; and (3) liquidated damages of P324,147.94. Moreover, the liquidated damages and the attorney’s fees serve the same purpose, that is, as penalty for

breach of the contract. Therefore, we reduce the award of attorney’s fees to 25% of the principal obligation, or P351,028.50.

WHEREFORE, we AFFIRM the appealed Decision dated 7 January 2002 of the Court of Appeals in CA-G.R. CV No. 56816 with MODIFICATION as regards the award of attorney’s fees. Petitioner Titan Construction Corporation is ordered to pay respondent Uni-Field Enterprises, Inc. attorney’s fees of P351,028.50. SO ORDERED.

VICENTA P. TOLENTINO and JOSE TOLENTINO vs CA 517 SCRA 732 Facts: After a homestead lot they had bought and mortgaged were ordered re-sold to the original owners by the court, Vicenta Tolentino went to BPI with a check for P16,000, trying to redeem the land. She was told that it was sold a year ago, when the court decision became final. However, the Tolentinos were told they could still redeem two other lots they had mortgaged with BPI after paying P75,995.07, the balance of the loan after the de la Cruzes had paid P16,000 for the homestead lot. Instead of redeeming the two other lots, Vicenta consigned payment to the court, giving a crossed PNB check for P91,995.07, for the redemption of the three lots, including the homestead lot. However, she ordered payment stopped on the check the following day, upon advice of counsel and to protect her rights, she said. She said this was to prevent BPI from encashing the check without returning all the foreclosed properties. Then she filed a redemption case against BPI, imputing bad faith for failing to return all the foreclosed properties. The complaint was dismissed. On appeal, one of the issues raised was the mode of consignation. Art. 1249 says that debts should be paid in the currency stipulated or, if it is not specified, then in legal tender. Since a check is not legal tender, BPI was not compelled to accept it. Issue: WON BPI should accept it Held: The court ruled that Art. 1249 does not apply in this case because the Tolentino’s debt was extinguished when the property was foreclosed and sold to satisfy the debt. What remained was their right to redeem said properties, which is not an obligation but a privilege. Once they exercise the right to redeem, they would then have an obligation to pay, but that obligation would be extinguished only when the check is encashed. Since the formal offer to redeem was made during the period of redemption prescribed by law, the Tolentinos may redeem the two other properties mortgaged to BPI. They were not allowed to redeem the homestead lot because the decision of the lower court was already final and there was no finding of grave abuse of jurisdiction that would justify a reversal of the decision. SPOUSES POLTAN vs. BPI FAMILY SAVINGS BANK G.R. No. 164307, March 5, 2007. Facts: In a Complaint docketed as Civil Case No. 94-70655 for replevin and damages filed with the Regional Trial Court (RTC) of Manila, Branch XVIII, by respondent BPI Family Savings Bank, Inc. (BPI) against petitioners Rodelio and Alicia Poltan, BPI alleged that on 11 November 1991, the petitioners obtained a loan evidenced by a promissory note from Mantrade Development Corporation (Mantrade) secured by a chattel mortgage over a 1-unit Nissan Sentra Motor Vehicle Issue; WON a contract of adhesion is not per se inefficacious. Held: A contract of adhesion is defined as one in which one of the parties imposes a ready-made form of contract, which the other party may accept or reject, but which the latter cannot modify. One party prepares the stipulation in the contract, while the other party merely affixes his signature or his “adhesion” thereto, giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing. Contracts of adhesion wherein one party imposes a ready-made form of contract on the other are not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. A contract of adhesion is just as binding as ordinary contracts. It is true that this Court had, on occasion, struck down such contracts as being assailable when the weaker party is left with no choice by the dominant bargaining party and is thus completely deprived of the opportunity to bargain effectively. Nevertheless, contracts of adhesion are not prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to determine the respective claims of contending parties on their efficacy.

The petitioners failed to show that they were under duress or forced to sign the loan documents. They were presumed to have signed the assailed documents with full knowledge of their import.

VDA DE GURREA v SUPLICO G.R. No. 144320; April 26, 2006

FACTS: The case involves an annulment of title over a parcel of land located in San Juan, Metro Manila, which was originally owned by Rosalina Gurrea, who transferred the ownership of the same to Adelina Gurrea. The latter continued to be the owner of the lot until her death. Thereafter Special Proceedings No.7815 was instituted to have the will which she executed during her lifetime probated for the purpose of settling her estate. Ricardo Gurrea, an heir of Adelian Gurrea filed an opposition to the probate of will and was duly represented by his counsel Atty. Enrique Suplico. The consideration for such representation involves a contingent fee of 20% of whatever maybe due the latter, be it real or personal property. ISSUE: Whether or not the probate proceedings have already been closed and terminated when the subject lot was transferred to Atty. Suplicio HELD: In the present case, while the subject lot was assigned as Ricardo’s share in the project of partition executed by the heirs of Adelina Gurrea, the title over the subject lot was still in the name of the latter and was not yet conveyed to Ricardo when the Transfer of Rights and Interest was executed. As correctly cited by petitioners, the Court held in Lucero v. Bañaga that: [t]he term “delivery” or tradition has two aspects: (1) the de jure delivery or the execution of deeds of conveyance and (2) the delivery of the material possession. Having been established that the subject property was still the object of litigation at the time the subject deed of Transfer of Rights and Interest was executed, the assignment of rights and interest over the subject property in favor of respondent is null and void for being violative of the provisions of Article 1491 of the Civil Code which expressly prohibits lawyers from acquiring property or rights which may be the object of any litigation in which they may take part by virtue of their profession.

LA’O v REPUBLIC 489 SCRA 424 FACTS: : GSIS is the ed owner of 3 parcels of land in Ermita with an area of around 821 m2, a 5-storey building and improvements. GSIS and the RP, through the Office of the Government Corporate Counsel (OGCC), entered into 2 contracts: 1. A "lease-purchase" agreement on June 22, 1978 where GSIS agreed to transfer the property to the OGCC for P1.5 million, payable in equal yearly amortization-lease rentals of P100,000 for a period of 15 years. On December 22, 1980, petitioner offered to purchase the property. On May 10, 1982, GSIS and petitioner executed a second "leasepurchase" agreement. GSIS agreed to sell the same property to petitioner for P2,000,000, with a down payment of P200,000 and the balance payable within a period of 15 years at 12% interest per annum, compounded yearly. ISSUE: WON the 2nd contract valid as claimed by petitioner, or null and void as decided by the RTC and affirmed by the CA HELD: YES, Null and void. Decision affirmed. The second contract was null and void ab initio for being in contravention of Section 3(e) and (g) of RA 3019, otherwise known as the "Anti-Graft and Corrupt Practices Act". Both the trial and appellate courts found that the second contract gave petitioner unwarranted benefits and was grossly disadvantageous to the government. Under Article 1409(7) of the Civil Code, the contract was null and void from the beginning. The Agreement between [petitioner] and the GSIS which is the subject of the instant case had in fact transferred the economic benefits which the Republic used to enjoy to [petitioner]. Serrano vs. Gallant Maritime Services G.R. No. 167614 March 24, 2009 Non-impairment of Contract Clause, OFW Employment Contract DECEMBER 4, 2017 FACTS: For Antonio Serrano, a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042, does not magnify the contributions of OFWs to national development, but exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their lump-sum salary either for the

unexpired portion of their employment contract “or for three months for every year of the unexpired term, whichever is less” (subject clause). Petitioner claims that the last clause violates the OFWs’ constitutional rights in that it impairs the of their contract, deprives them of equal protection and denies them due process. ISSUE: Does the 5th paragraph of Section 10, RA 8042 violate the non-impairment of contract clause of the Constitution? HELD: NO. The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto. As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042. GOLDENWAY MERCHANDISING CORPORATION v. EQUITABLE PCI BANK, GR No. 195540, 2013-03-13 Facts: On November 29, 1985, Goldenway Merchandising Corporation (petitioner) executed a Real Estate Mortgage in favor of Equitable PCI Bank (respondent) over its real properties. The mortgage secured the Two Million Pesos (P2,000,000.00) loan granted by respondent to petitioner and was duly ed.[4] As petitioner failed to settle its loan obligation, respondent extrajudicially foreclosed the mortgage on December 13, 2000. During the public auction, the mortgaged properties were sold for P3,500,000.00 to respondent. Accordingly, a Certificate of Sale was issued to respondent... on January 26, 2001. On February 16, 2001, the Certificate of Sale was ed and inscribed on TCT Nos. T-152630, T-151655 and T-214528.[5] However, petitioner was told that such redemption is no longer possible because the certificate of sale had already been ed. Petitioner also verified with the Registry of Deeds that title to the foreclosed properties had already... been consolidated in favor of respondent and that new certificates of title were issued in the name of respondent on March 9, 2001. Issues: WON Section 47 of R.A. No. 8791 is inapplicable considering that the contracting parties expressly and categorically agreed that the foreclosure of the real estate mortgage shall be in accordance with Act No. 3135. HELD The law governing cases of extrajudicial foreclosure of mortgage is Act No. 3135,[14] as amended by Act No. 4118. The one-year period of redemption is counted from the date of the registration of the certificate of sale. In this case, the parties provided in their real estate mortgage contract that upon petitioner's default and the latter's entire loan obligation becoming due, respondent... may immediately foreclose the mortgage judicially in accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended.However, Section 47 of R.A. No. 8791 otherwise known as "The General Banking Law of 2000" which took effect on June 13, 2000, amended Act No. 3135. Under the new law, an exception is thus made in the case of juridical persons which are allowed to exercise the right of redemption only "until, but not after, the registration of the certificate of foreclosure sale" and in no case more than three (3) months after foreclosure,... whichever comes first.[16] The purpose of the non-impairment clause of the Constitution[20] is to safeguard the integrity of contracts against unwarranted interference by the State. As a rule, contracts should not be tampered with by subsequent laws that would change or modify the... rights and obligations of the parties.

HEIRS OF WILLIAM SEVILLA v. LEOPOLDO SEVILLA, GR No. 150179, 2003-04-30 Facts: Filomena Almirol de Sevilla died intestate leaving 8 children William, Jimmy and Maria are now deceased and are survived by... their respective spouses and children August 8, 1986, Felisa... executed another document denominated as "Donation Inter Vivos" ceding to Leopoldo Sevilla her 1/2 undivided share in Lot No. 653, which was accepted by Leopoldo in the same document... respondents denied that there was fraud or undue pressure in the execution of the questioned documents. They alleged that Felisa was of sound mind at the time of the execution of the assailed deeds and that she freely and voluntarily... ceded her undivided share in Lot No. 653 in consideration of Leopoldo's and his family's love, affection, and services rendered in the past Issues: WON that the Deed of Donation is tainted with fraud because Felisa Almirol, who was then 81 years of age,... was seriously ill and of unsound mind at the time of the execution thereof; and that the Deed of ExtraHELD: petitioners failed to show proof why Felisa should be held incapable of exercising sufficient judgment in ceding her share to respondent Leopoldo.

One who alleges defect or lack of valid consent to a contract by reason of fraud or undue influence must establish by full, clear and convincing evidence such specific acts that vitiated a party's consent, otherwise, the latter's presumed consent to the... contract prevails. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it. donor's capacity shall be determined as of the time of the making of the donation. Like any other contract, an agreement of the parties is essential,[22] and the attendance of a vice of consent renders the donation voidable. There is fraud when, through the insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. There is undue influence when a person takes improper... advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. Ei incumbit probatio qui dicit, non qui negat. He who asserts, not he who denies, must prove. Fraud and undue influence that vitiated a party's consent must be established by full, clear and convincing evidence, otherwise, the latter's presumed consent to the contract prevails

NACAR VS GALLERY FRAMES GR NO 18971; AUG 13, 2013

FACTS: Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey, Jr. Nacar alleged that he was dismissed without cause by Gallery Frames on January 24, 1997. On October 15, 1998, the Labor Arbiter (LA) found Gallery Frames guilty of illegal dismissal hence the Arbiter awarded Nacar P158,919.92 in damages consisting of backwages and separation pay. Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court affirmed the decision of the Labor Arbiter and the decision became final on May 27, 2002. After the finality of the SC decision, Nacar filed a motion before the LA for recomputation as he alleged that his backwages should be computed from the time of his illegal dismissal (January 24, 1997) until the finality of the SC decision (May 27, 2002) with interest. The LA denied the motion as he ruled that the reckoning point of the computation should only be from the time Nacar was illegally dismissed (January 24, 1997) until the decision of the LA (October 15, 1998). The LA reasoned that the said date should be the reckoning point because Nacar did not appeal hence as to him, that decision became final and executory. ISSUE: Whether or not the Labor Arbiter is correct. RULING: No. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases where the dismissed employee wins, or loses but wins on appeal). The first part is the ruling that the employee was illegally dismissed. This is immediately final even if the employer appeals – but will be reversed if employer wins on appeal. The second part is the ruling on the award of backwages and/or separation pay. For backwages, it will be computed from the date of illegal dismissal until the date of the decision of the Labor Arbiter. But if the employer appeals, then the end date shall be extended until the day when the appellate court’s decision shall become final. Hence, as a consequence, the liability of the employer, if he loses on appeal, will increase – this is just but a risk that the employer cannot avoid when it continued to seek recourses against the Labor Arbiter’s decision. This is also in accordance with Article 279 of the Labor Code. Planters Development Bank vs Spouses Lopez GR NO 186332; October 23, 2013 Facts: Sometime in 1983, the spouses Emesto and Florentina Lopez applied for and obtained a real estate loan in the amount of 3,000,000.00 from Planters Bank. The loan was intended to finance the construction of a four-story concrete dormitory building. The loan agreement4 dated May 18, 1983 provided that the loan is payable for fourteen (14) years and shall bear a monetary interest at twenty-one percent (21%) per annum (p.a.). Furthermore, partial drawdowns on the loan shall be based on project completion, and shall be allowed upon submission of job accomplishment reports by the project engineer. To secure the payment of the loan, the spouses Lopez mortgaged a parcel of land covered by Transfer Certificate of Title No. T-16233.5 On July 21, 1983, the parties signed an amendment to the loan agreement. Accordingly, the interest rate was increased to twenty-three percent (23%) p.a. and the term of the loan was shortened to three years.6 On March 9, 1984, the parties executed a second amendment to the loan agreement. The interest rate was further increased to twenty-five percent (25%) p.a. The contract also provided that releases on the loan shall be subject to Planters Bank’s availability of funds.7 Meanwhile, the Philippine economy deteriorated as the political developments in the country worsened. The value of the peso plunged. The price of the materials and the cost of labor escalated.8 Eager to finish the project, the spouses Lopez obtained an additional loan in the amount of ₱1,200,000.00 from Planters Bank. On April 25, 1984, they entered into a third amendment to the loan agreement. The amount of the loan and the interest

rate were increased to ₱4,200,000.00 and twenty-seven percent (27%) p.a., respectively. Furthermore, the term of the loan was shortened to one year. The contract also provided that the remaining loan shall only be available to the spouses Lopez until June 30, 1984.9 On the same date, the spouses Lopez increased the amount secured by the mortgage to ₱4,200,000.00.10 On August 15, 1984, Planters Bank unilaterally increased the interest rate to thirty-two percent (32%) p.a.11 The spouses Lopez failed to avail the full amount of the loan because Planters Bank refused to release the remaining amount of ₱700,000.00. On October 13, 1984, the spouses Lopez filed against Planters Bank complaint for rescission of the loan agreements and for damages with the Regional Trial Court (RTC) of Makati City.12 They alleged that they could not continue the construction of the dormitory building because Planters Bank had refused to release the remaining loan balance. ISSUE: Whether the spouses Lopez violated the loan agreement; Held: In the present case, the mortgaged properties had already been foreclosed. They were already sold to the highest bidder at a public auction. We recognize that transferees pendente lite are proper, but not indispensable, parties in this case, as they would, in any event, be bound by the judgment against Planters Bank.39 However, the respondents did not overcome the presumption that the buyers bought the foreclosed properties in good faith.40 The spouses Lopez did not cause the annotation of notice of lis pendens at the back of the title of the mortgaged lot.41 Moreover, the respondents did not adduce any evidence that would show that the buyers bought the property with actual knowledge of the pendency of the present case. Furthermore, the spouses Lopez’s failure to pay the overdue loan made them parties in default, not entitled to rescission under Article 1191 of the Civil Code.